FORECAST DEFIANCE

Published: 23 July, 2008

By Jack Hibberd

John Ballard, Southcorp's recently appointed CEO, has remained defiant in the face of a grim financial forecast revealing that Southcorp is heading towards a full-year loss. The challenges facing Southcorp are far from insurmountable,' said Ballard, and great progress has already been made in identifying the issues that have adversely affected our business performance.' For the year ending 30 June, the company expects to make an operating profit of around $130 million. After significant items and interest, however, this will result in the producer making a loss of around $12.8 million. No dividend will be paid. In a statement, the company repeated the reasons given for Southcorp's disappointing half-year results: less-than-optimal promotional expenditure; a smaller contribution from super-premium wines, due to the lower 2000 vintage; and difficult trading in the UK and Australia. Volumes for 2003 in the UK and Europe are expected to be 15% down on 2002, with the figures for the UK expected to be a disastrous 23% down. Ballard said, however, that Southcorp was moving in the right direction: Most notably, we have decided to re-align shipments more closely with underlying depletions. We are confident that this approach will result in more effective control over product pricing, promotional expenditure and overall business performance.' In the UK the company has taken the decision to moderate volume growth in order to focus on rebuilding margins'.